The cytokine IL-4 is produced by TH2 lymphocytes, NKT cells, and by cells of the innate immune system including mast cells, and eosinophils. It was originally identified as a stimulator of B cell proliferation, but it is now clear that IL-4 can regulate proliferation, apoptosis, gene expression, and differentiation in many cell types. In particular for this proposal, IL-4 can play a critical role in regulating the differentiation and functional activity of cells of the monocyte-macrophage lineage. Such cells are derived from common hematopoietic progenitors and can differentiate into several cell types with markedly distinct characteristics depending on the extracellular environment. Some of these cell types are mononuclear, such as dendritic cells and macrophages, while others fall into the multinucleated category including multinucleated-giant cells (MNG), and osteoclasts. These cells can play critical roles in granuloma formation and in bone homeostasis. There have been numerous reports describing effects of IL-4 on bone biology. Previous studies, performed using co-culture systems, have demonstrated complex effects of IL-4 on both osteoblasts and myeloid-derived osteoclasts. We took advantage of a simplified system using recombinant RANKL to directly test the effect of IL-4 on osteoclasts. We have shown that IL-4 directly prevents the RANKL-induced differentiation of myeloid precursors to osteoclasts while promoting the formation of giant cells. Furthermore, we found that IL-4 inhibits bone resorption by mature osteoclasts;these responses were STAT6-dependent. We found that the inhibitory effect of IL-4 on progenitors is irreversible and is associated with changes in gene expression patterns. Based on these studies, our specific goal is to understand the molecular mechanisms by which IL-4 regulates the development of myeloid precursors away from the osteoclast fate and suppresses the functional activity of mature osteoclasts. We hypothesize that IL-4 inhibits osteoclast development and function by acting at 3 different steps in the process by (1) regulating gene expression profiles in the developing progenitors altering the differentiation fate of a multipotential precursor, (2) influencing RANK-initiated responses in committed progenitors, and (3) suppressing the bone resorbing activity of mature osteoclasts. The specific aims designed to test this hypothesis are (1) to characterize the STAT6-regulated genes responsible for the IL-4-mediated control of myeloid progenitor fate, (2) to determine the mechanism by which the IL-4-activated STAT6 pathway regulates RANK-induced responses in committed progenitors, and (3) to analyze the mechanism by which IL-4 regulates mature osteoclast function. Completion of these aims will enhance our understanding of the mechanisms by which IL-4 regulates myeloid cell development and function.